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BUSINESS IN BRIEF 8/9   2010-09-08 - VNA, SGGP

China cassava processors seek partners


More than 30 Chinese cassava importers and suppliers of cassava processing technology met local businesses on Sept.7 in HCM City to exchange information and seek business partners.


The meeting was arranged by the Trade Promotion Agency under the Ministry of Industry and Trade, the China Trade Office in Vietnam , the China Cassava Starch Industry Association and the Vietnam-China Trade Promotion Centre.


Cassava, an edible root, has become an increasingly profitable export for Vietnam due to growing demand in foreign markets, said Le Xuan Duong of the Trade Promotion Agency.


Mainland China is the biggest importer of Vietnamese cassava, accounting for 90 percent of the industry’s export volume, followed by the Republic of Korea and Taiwan , Duong said.


With the huge demand for cassava used to produce food, animal feed and ethanol-blended petrol, China every year needs to import more than six million tonnes of cassava to meet its production needs, he said.


Vietnam has more than 500,000ha under cassava cultivation and an output of more than nine million tonnes of fresh cassava a year.


Of this, it annually exports more than four million tonnes after meeting domestic demand.


Vietnam ’s cassava exports are mostly starch powder and dried chips, Duong said.


Last year, the country earned 800 million USD from cassava exports, double that of pepper shipment revenues.


However, Vietnam was only able to export 1.14 million tonnes of cassava worth 307 million USD in the first six months of this year, down 52.4 percent in volume and 12.8 percent in value compared to the same period last year.


Duong attributed this decline mainly to local traders setting prices too high, pushing importers to buy from other countries.


Wen Yu Ping, Chairwoman of the China Cassava Starch Industry Association, said China was a huge market for cassava chips and starch, but most cassava products in Vietnam were produced on a small-scale, making it difficult for Chinese importers to purchase in large volumes. She suggested that the Vietnamese Government regulates standards for cassava export and reduce the number of brokers involved in purchasing the products. These measures will facilitate import, export activities between two sides, she said.


Until recently, people were reluctant to grow cassava because they thought that it caused soil degradation and generated low profit, said Tran Cong Khanh, an expert from the Institute of Agricultural Science for Southern Vietnam .


The situation has changed after the introduction of new cultivation techniques and high-yielding varieties, he added.


Cassava is now an important source of income for small farmers in many provinces, Khanh said.


Cassava area and output have increased strongly in the last decade, from 234,000ha in 2000 to 560,000ha in 2009, with yields increasing from 8.6 tonne per ha in 2000 to 16.8 tonne per ha in 2009.


The crop has helped farmers in many areas escape poverty, Khanh said.


But the rapid development of cassava production has also raised environmental concerns because the soil is exhausted after two or three crops.


The sector therefore needs to adopt appropriate cultivation techniques to maintain output and protect the soil, Khanh cautioned.


Vietcombank receives official approval to increase capital


The partly-privatised Vietcombank on Sept. 7 received Government approval to raise their charter capital by 33 percent to 17.59 trillion VND (902 million USD).


The move aims to help increase the bank’s capital adequacy ratio (CAR).


"The charter capital increase is very very positive," said Vietcombank management board member Le Thi Hoa in a phone interview with Vietnam News.


Vietcombank, coded VCB on HCM Stock Exchange, is in the process of finalising its financial prospectus to submit to the State Securities Commission next week with the hope of receiving approval by the end of this month.


Under the proposal, Vietcombank will issue additional shares to all existing shareholders in accordance with the ratio of 100:33 at the face value of 10,000 VND per share.


"We hope that right after the increase, our CAR will increase to 9-10 percent from 8.45 percent and we will have more capital to do business," Hoa said.


Under the Circular No13 issued by the State Bank of Vietnam , commercial banks must have a CAR of at least 9 percent by the end of this month, which is said to challenge several banks.


In the past two months, Vietcombank cut stakes at Vietnam Eximbank and Gia Dinh Bank to 6.93 percent and 11 per cent to restructure their investment portfolios in an effort to raise their CAR by the end of the month.


Early last month, Vietcombank increased its charter capital to 13.22 trillion VND (678.15 million USD).


Fitch Ratings recently lowered Vietcombank’s individual rating from D to D/E, removed the rating from Rating Watch Negative, and affirmed Vietcombank’s Support Rating at 4.


Fitch said the downgrade reflected Vietcom-bank’s substantially weakened balance sheet that arose from excessively strong loan growth and the fragile quality of loans. Vietcombank’s credit profile was said to be comparable to D/E-rated State-owned banks, even though the bank’s loan to deposit ratio was among the lowest.


"That’s just their business and their ratings are not always true," said a representative from the bank who asked to be unnamed.


A foreign credit rating service provider like Fitch does not have a full understanding of Vietnamese banks and their standards may fit more with foreign banks, the official said.


"Look at the market response to that news. Nothing happens and VCB shares are in good liquidity, it is just up and down as usual," said the official.


On Sept.7, VCB share closed down 1.6 percent with individual shares priced at 37,400 VND each (1.91 USD).


The Hanoi-based bank, which remains more than 90.7 percent State-owned, posted a first-half profit of 2.8 trillion VND (145.8 million USD), up 7.3 percent against the same six months last year. Net income from non-credit services was up 15 percent to a total of 475 billion VND (24.7 million USD).


Vietcombank has increased its risk provision to 39.6 percent against the first half of last year to 350 billion VND (18.2 million USD) and as of June 30 has total assets worth 246.3 trillion VND (12.8 billion USD).


Hanoi to start urban railway construction


Construction will begin on Sept. 22 on a pilot urban railway, running from Nhon in Tu Liem district to Hanoi Railway Station, as part of a largest ever public transport project in Hanoi, said Head of the municipal People’s Committee’s Office Nguyen Thinh Thanh.


The municipal People’s Committee requested Tu Liem district to finalise preparations, especially site clearance for the project before Sept. 16.


Under the plan till 2020, Hanoi will have five urban railway routes, linking the inner city with nearby urban centres of Bac Ninh, Vinh Phuc, Hung Yen and Thai Nguyen.


The Nhon-Hanoi Railway Station, the third route of the plan, has a total length of 12km, connecting the city’s west part to the downtown and the southern part.


The first route will run between Ngoc Hoi, Yen Vien and Nhu Quynh. It will link areas located in the northeast and the south of Hanoi with downtown.


The second route, Noi Bai-downtown-Thuong Dinh, is the backbone of the urban area at the present and in the future. It will connect with the railway route from Cat Linh, Hanoi to Ba La, Ha Dong.


The fourth route will run between Dong Anh, Sai Dong, Vinh Tuy, Thanh Xuan, Tu Liem, Thuong Cat and Me Linh. This route will connect urban development projects.


The fifth route will run between the southern part of West Lake , Ngoc Khanh and Lang-Hoa Lac to connect the downtown with urban areas located along Lang-Hoa Lac corridor.


Gold hits new high 


The price of gold in Vietnam jumped to an all-time high of VND29.45 million a tael (1.2 ounces) on September 8 after global price strongly rose amid concerns over European financial turmoil.

Bullion was bought at VND29.35-29.4 million and sold at VND29.4-29.45 million, an increase of VND140,000-200,000 a tael depending on gold brand.


As domestic prices remained cheaper than global prices, jewelers continued to maintain a narrow range between buying and selling prices.


According gold traders, with a new record high, trading on bullion market would probably improve. However, trading volume would not be high as most investors had sold the metal to book profits when the price hit VND29 million a tael.


The US dollar exchange rate against the Vietnamese dong was unchanged as of the previous day.


Globally, bullion rose as a slump in equities spurred demand for the precious metal as a safe haven. In addition, the Europe’s debt crisis unexpectedly became worse.


An industry group said Germany’s 10 largest banks may need 105 billion euros to meet new regulations, causing pessimism about the financial strength of European banking system.


Gold for immediate delivery rose as much as $8.6 an ounce, or 0.7 percent, to close at $1,256.2 an ounce in New York. Earlier, the metal hit $1,260.9 an ounce near a record high of $1,265.3 an ounce made on June 21.


December-delivery gold surged $8.2 an ounce to close at a record $1.259.3 an ounce. Earlier, it touched $1,261.6 an ounce, the highest level since June 28.


In Asia, the metal climbed by $2 an ounce to $1,258 as of 9:35 am Vietnamese time.


Asian stock markets tumbled today. Japan’s Nikkei 225 index fell nearly 2 percent, while Hong Kong’s Hang Seng index dropped 1 percent.


The shared-currency erased 1.5 percent, falling to nearly $1.27 a euro after bad news about European banking system was spread.


Holdings at SPDR Gold Trust, the world’s largest exchange-traded fund backed by bullion, stayed unchanged at 1,294.4 metric tons.


Crude oil futures for October settlement closed down $0.51 a barrel, or 0.7 percent, to 74.09 a barrel on the New York Mercantile Exchange.


Crude oil has declined 7 percent this year.


In Asia, the liquid continued to retreat to below $74 a barrel this morning.


Phan Thiet has another five-star hotel on coastline 


The five-star Sea Links Beach Hotel has started operations in Phan Thiet City, home to the resort town of Mui Ne, and plans to hold a soft opening ceremony in the middle of October 2010.


The hotel is part of Sea Links City, a complex of luxury properties owned by the Rang Dong Group including Sea Links Golf & Country Club, and golf course villas.


It is the first five-star beach hotel in Mui Ne, offering a magnificent view of the cape. Standing on top of a hill, the hotel offers a panorama of the sand dunes and the ocean in the distance, which is blue all year round since Phan Thiet has more than 300 sunny days a year.


The top floor is for reception and the lounge. Under it are the five levels that include 188 rooms, all facing the ocean to provide a panoramic sea view. The rooms have floor-to-ceiling glass windows so that guests can see an ocean view with bobbing boats, even when they relax in the bathtub.


Down the hill are four swimming pools, where guests can take a closer look at the 18-hole Sea Links golf course.


Phan Thiet is about 200 kilometers northeast of Ho Chi Minh City. According to the hotel’s management, chauffeur service can be arranged to pick guests up from Ho Chi Minh City’s Tan Son Nhat Airport to Sea Links City.

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